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NAT: Suez Canal blockage gave rate insight

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The leader of Bermudian-based Nordic American Tankers Ltd told the company’s shareholders and investors yesterday to expect rate increases for its ships.

Herbjorn Hansson is the founder, chairman and chief executive officer of NAT.

He was speaking following the blockage of the Suez Canal in Egypt late last month by the huge container ship Ever Given, which resulted in an increase in shipping rates.

Mr Hansson noted that “when the canal was opened, tanker rates fell back, although slightly less than the original increase”.

He added: “The immediate strong increase in tanker rates due to this short blockage of the Suez Canal is an illustration of a market nearing a boiling point.

“Long before the Suez Canal was closed we saw a strong increase in rates for our Suezmax tankers which can load one million barrels.

“The strategic position of our company has been substantially improved over the last two years. We have 24 ships trading on short term contracts, whilst one ship is on a longer term contract.

“There is a strong drive in the market, indicating an improvement in the time to come. We have recently seen this improvement, having concluded contracts giving rates between $15,000 a day up to $25,000 a day.

“In the weeks rather than months ahead, we expect an increase in rates for our ships. This development has already started.”

The six-day blockage of one of the world’s major maritime trade routes is also widely expected to result in large reinsurance claims, adding to upward pressure on marine reinsurance rates.

In its April reinsurance renewals report released last week, Bermudian-based Willis Re said of global marine reinsurance rates: “Where loss record justifies there were significant rate increases but more commonly high single digit increases with the usual level of discussion around what constituted ‘risk adjusted’.”

The Ever Given, 400 metres long and having a gross weight of 200,000 tonnes, was attempting to navigate the canal when it ran aground.

The ship was stuck at an angle, which meant that other ships heading north or south through the waterway could not get past to continue their journeys.

The canal links the Red Sea and the Mediterranean, and is an important route for maritime traffic journeying between Asia, the Middle East and Europe.

Each day, on average, about 50 vessels pass through the canal, which is 120 miles long, 205 metres wide and 24 metres deep.

The Ever Given is registered in Panama, and operated by Taiwan’s Evergreen Marine. It was heading for Rotterdam, Netherlands, when it became stuck in the canal.

The ship’s technical manager is Bernhard Schulte Shipmanagement, which has an office in Bermuda.

Economic pinch: when the giant containership Ever Given became wedged across the Suez Canal last month it blocked one of the world’s most important maritime trade routes blocking traffic in the vital waterway (Photograph by Suez Canal Authority via AP)
Nordic American Tankers CEO Herbjorn Hansson (File photograph)

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Published April 07, 2021 at 8:00 am (Updated April 06, 2021 at 5:38 pm)

NAT: Suez Canal blockage gave rate insight

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